The USD corrected some of the gains it saw yesterday against the main European currencies, while the AUD was the underperformer today as it extended to fresh trend lows today. The JPY was near net unchanged after first weakening during Tokyo trade and then recovering during the European morning session. Stock markets were higher in both Asia and near flat in Europe by the measure of the Stoxx 600 index. Overall, trade seemed non-committal ahead of the central bank policy decisions and U.S. payrolls data that are due later in the week. Economic data were good in Europe and mixed in Asia. We saw a 15-month high in Eurozone consumer confidence and another welcome data sign from the Eurozone southern periphery with Spanish GDP improving to -0.1% q/q from -0.5% q/q, adding to the message given by the jump in Italian business confidence yesterday. In Asia we saw Australia building approvals fall by a disappointing 6.9% m/m in June and weak production in Japan and South Korea of -3.3% and -2.6% y/y respectively. Japanese unemployment was more encouraging, dropping more than expected in June to 3.9% from 4.1%. RBA Governor Stevens also gave some dovish signals, which contributed to AUD weakness.

[EUR, USD]EUR-USD was steady at modestly higher levels in the late London AM session at around 1.3265, about 25 pips up on London's closing level yesterday. The euro was supported by a 15-month high in Eurozone consumer confidence and more another welcome data sign from the Eurozone southern periphery with Spanish GDP improving to -0.1% q/q from -0.5% q/q, adding to the message given by the jump in Italian business confidence yesterday. EUR-USD still remains net lower on the week following yesterday's drop and today is on course to post an inside-range as the market makes time into the Fed and ECB decisions and the U.S. jobs report showstopper this week. Selling interest is reported around 1.3280 and into the major option barrier level of 1.3300.

[USD, JPY]The JPY was near net unchanged on Tuesday after first weakening during Tokyo trade and then recovering during the European morning session. USD-JPY edged out a four-day high of 98.46 in Tokyo before retreating back to sub-98.0 levels. A trend support line comes in at 97.80 and resistance is given by the present position of the 50-day moving average, at 98.57. The JPY has been trending firmer since early July, though we expect "Abenomics" policies to limit upside potential. Japanese data today were mixed today. Industrial production in Japan was -3.3% y/y in June though unemployment was more encouraging, dropping more than expected in June to 3.9% from 4.1%. Overall, trade seemed non-committal ahead of the central bank policy decisions and U.S. payrolls data that are due later in the week.

[GBP, USD]GBP-USD was near unchanged from yesterday's London closing level of 1.5315. The pair yesterday descended from the 1.5400 region amid market repositioning into the week's high profile risk events. The break of the 1.5355-65 support zone, which encompassed previous lows and a trend support line, was a technically bearish development. Support is pegged at 1.5305, the present situation of the 50-day moving average, and 1.5300 itself, below which sell-stop orders can be expected to be clustered. Today's U.K. calendar is light. The BoE's Monetary Policy Meeting, concluding Thursday, highlights a fairly busy week in the U.K. We expect the BoE will leave the repo rate and QE total unchanged but to announce a formal adoption of forward policy guidance. In the event this may cause some sterling weakness, but such a move by the BoE wouldn't constitute a sea-change for markets, having been well anticipated already.

[USD, CHF]USD-CHF remains in a bear trend, overall, but there is potential for a test of 0.9370, which marks the positive of the two-week trend resistance line. The Swiss calendar this week is highlighted by the KOF economic barometer, expected to improve to 1.21 (median same) after 1.16 in the previous month. This would signal improving economic momentum over the next six months. The SVME PMI survey for July is expected to show similar improvement, to 52.5 from 51.9. Although the fundamental outlook is improving we don't expect any softening in the SNB's commitment to maintain zero interest rates and its 1.20 limit cap in EUR-CHF.

[USD, CAD]USD-CAD perked up amid the generally firmer tone of the USD into the Fed's announcement on Wednesday and, beyond that, the U.S. payrolls report on Friday. Canada also releases GDP data on Wednesday, and trade in the meantime is likely to be non-committal. The 1.0250 level remains key, with bids parked at the level, and sell-stops below. On the other side, offers are likely around 1.0300.